A federal judge has dismissed the Mechanical Licensing Collective's (MLC) bundling-focused copyright lawsuit against Spotify, marking a significant legal victory for the streaming platform's bundling strategy.

Judge Analisa Torres granted Spotify's dismissal motion, ruling that Section 115 and its implementing regulations unambiguously support Spotify's position. The court determined that audiobook streaming is a distinct product from music streaming with more than token value, making Spotify Premium's classification as a bundle legitimate.

Key Points of the Ruling:

• The timing of Spotify's bundle reclassification was deemed legally irrelevant
• The number of subscribers accessing audiobooks doesn't affect the bundle classification
• The court must interpret regulations as written, not based on ordinary consumer understanding of "bundles"

Impact and Industry Response:

• Spotify's U.S. bundles now account for over 99% of subscriptions
• The company has saved approximately $100 million in royalty payments since implementing bundling
• Other streaming platforms like Apple Music and Amazon Music (with Audible) may follow similar strategies
• Spotify has already secured a direct deal with Universal Music Publishing Group (UMPG)

Spotify celebrated the ruling, stating that bundle offerings play a crucial role in expanding paid music consumption and growing industry revenue. The company emphasized that while regulations may be complex, their recent UMPG deal demonstrates how direct licenses can create flexibility and additional benefits.

This ruling sets a significant precedent for the music streaming industry, potentially influencing how other platforms structure their subscription offerings and royalty payments moving forward.

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